Neil Bage: The investment cost of being human

Difference between perception and reality

clock • 4 min read

How clients think they will behave and actual human behaviour are two very different things, writes Neil Bage. Here he explores the 'behaviour gap' and why risk profiling needs to dig deeper

You may have heard of the phrase "behaviour gap", attributed to financial adviser and author Carl Richards. Those two words describe "the difference between the higher returns that investors might potentially earn and the lower returns they actually do earn because of their own behaviour". Over the years, behavioural researchers have shown there to be several of these behaviour gaps. Importantly, they extend way beyond the world of investing, existing in all money domains. Essentially, a behaviour gap is the difference between perception and reality; the difference between what we ...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Your profession

HNW inheritance planning: Why international mobility is tearing up the old playbook

HNW inheritance planning: Why international mobility is tearing up the old playbook

'Advisers must also evolve beyond just fulfilling transactional roles'

Marc Acheson
clock 24 November 2025 • 4 min read
Autumn Budget 2025: Reeves set to raise up to £450m from mansion tax - reports

Autumn Budget 2025: Reeves set to raise up to £450m from mansion tax - reports

Set to hit 100,000 properties

Professional Adviser
clock 24 November 2025 • 1 min read
Why good advice relies on asking difficult questions

Why good advice relies on asking difficult questions

Difficult questions a 'core feature' of good advice

Ahmed Bawa
clock 21 November 2025 • 4 min read